| Special Report:Travel
Agents Selling Groups By Jeff Gayduk and John Kloster No segment
of the travel industry has been affected as greatly by economic and technological
enhancements as has the retail travel agent. Dating back nearly eight years, when
Delta Airlines instituted the first "commission cap" on airline tickets,
conventional travel agency profits derived from the sale of airline tickets have
steadily eroded to today's zero commission environment, where agencies are paid
strictly on service fees, back-end overrides or through opaque pricing models
instituted through consolidators. In short, travel agencies traditional source
of much of their earnings, airline commissions, no longer exist. At about
the same time that commission cuts were taking hold, internet technology that
allowed consumers to research and book their own airline tickets suddenly became
available to the general public. As travel agencies' monopoly on information began
to dissolve, consumers who didn't thought they could "go it alone" or
didn't receive useful advice from their travel agents began to use Internet travel
agencies for booking. Multi-million dollar start-up losses did not deter players
such as Travelocity and Expedia as they slowly gained acceptance with the traveling
public, turning on-line lookers into bookers. Hotels, car rentals and cruise bookings
were added over time. Most recently, these companies have developed the capability
to offer dynamic packaging. This double-whammy was the deathblow for thousands
of retail agencies as ensuing years saw record agency defaults, closures and mergers.
While agency numbers peaked at around 35,000 in the mid 90's, as of January 2003
there were 24,330 travel agencies registered with the Airlines Reporting Corporation.
Locations have declined at a clip of 10.6% from January '02. Though both
of these factors have contributed mightily to the demise of many brick and mortar
agencies, the news is not all gloom and doom on the T.A. frontier. As with any
paradigm shift of this proportion, these radical changes in the industry have
created new opportunities for advantageous entrepreneurs. Going Home
Once looked down upon, the position of "home-based agent" has become
an accepted profession. Many more travel agents have moved their businesses either
home or to non-storefront locations in order to keep their overhead down, while
still marketing to keep and expand their customer base. For example, membership
in the National Association of Commissioned Travel Agents, (NACTA), has grown
dramatically. Outside or home-based agents are generally more tech-savvy and have
turned to promoting groups as a way to build their client base. In many ways,
we see home based agents becoming quasi group leaders in the coming years, as
they keep their core base of customers and look to develop fun and interesting
activities. A key component of the independent agent's success is their personality
and connection to their travelers. There is no better way to personify this than
with unique group adventures designed with the agent as the "group leader."
To take advantage of this emerging trend, PTM has partnered with NACTA to offer
free or discounted subscriptions to its members. NACTA members currently promoting
groups are eligible for complimentary subscriptions. Those just starting out receive
a discounted rate of $10 annually. New Host Agencies have been popping
up across the U.S., since many home-based agents have given up their ticket stock
and bonding requirements, with the host agency giving them tools like CRS (Computer
Reservation Service) access, bulk buying discounts and preferred suppliers. Companies
include Nexion and Traveler's Advantage. There are strong opportunities for these
organizations to develop group modules to teach their independent agents the positive
aspects of selling groups. Bricks and Clicks
The other side
of the spectrum is on the brick and mortar agency. While it's true that locations
continue to drop, left standing are a stronger, more focused band of agencies
that are marketing-savvy, customer-service oriented and willing to invest in the
tools to be profitable in this environment. Increasingly they too are looking
to the Internet to compliment their retail locations. Also, they are looking
to leisure groups to restore profitability and gain new business. We hear almost
every day from both home-based and storefront agencies that groups are what are
keeping their businesses going and providing the lion's share of their profits.
A competent local agency can play a pivotal role in harnessing new group business
from religious groups, senior centers, park districts and special interest groups.
The vast majority of these organizations do not have anyone on hand to properly
develop a successful group travel program, and a successful agent can serve as
a liaison between the organization, their travelers and suppliers. PTM has partnered
with various organizations to promote subscriptions to our magazines, including
travel internet news service Positivespace.com, and agency consortia Vacation.com,
which represents over 10,00 locations, and Virtuoso, the elite of travel agency
consortia with over 300 locations spread across North America. Our research
shows that travel agents continue to deliver the lion's share of business to both
cruise lines and major tour operators. Group leaders often use travel agents,
in addition to planning their own trips. At the same time, some travel agents
are beginning to look more and more like group leaders. As these roles continue
to morph and evolve, we will work diligently to identify both emerging group leaders
and emerging travel agencies that are specializing in the group market.
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